Co-ops ask to balance regulations and stewardship

The U.S. Environmental Protection Agency (EPA) is considering new environmental standards for coal power plants that would tighten regulations limiting power plant emissions.

While complying with these standards could cost electric cooperatives nationwide millions of dollars, “the most pressing issue and the one that could have the biggest impact on us is the proposed rule that will come out this June on carbon dioxide emissions for existing power plants,” says Kirk Johnson, senior vice president of government relations at the National Rural Electric Cooperative Association.

Cooperatives nationally are more dependent on coal-fired generation than those in North Carolina and the rest of the industry. The reason lies in the tumultuous decade of the 1970s.

Electric co-ops and coal

For much of the 1970s, the nation was caught up in a complicated energy crisis that involved disruptions in Middle Eastern oil supplies and a conviction the world was running out of oil and natural gas. In 1977, President Jimmy Carter called on the U.S. to “shift to plentiful coal” to meet its growing energy needs. A year later, Congress went further, passing the Powerplant and Industrial Fuel Use Act to block the use of natural gas or oil to generate electricity.

Electric cooperatives stepped up to meet the challenge, adding 15,600 megawatts of coal-based capacity during the natural gas ban. “That’s when we built 70 percent of our coal generation, during the period leading up to and during the Fuel Use Act,” says John Novak, NRECA executive director of environmental issues. “We built these units when there was a need to build them and when the policy of the federal government was that coal was a domestic fuel source we should be using.”

The Fuel Use Act was repealed in 1987, but co-op efforts to help the nation meet its energy needs during a time of crisis have had long-term consequences. About 70 percent of the power generated by co-ops around the nation comes from coal plants, compared to about 37 percent for the industry overall, according to Novak.

North Carolina’s electric cooperatives power supply portfolio is more diverse. Only about 14 percent of the power supplied by the state’s cooperatives is generated by coal-fueled plants.

“This is a significant issue of national environmental and economic importance,” said Joe Brannan, CEO of NCEMC, the power supply entity owned by the state’s cooperatives. “North Carolina’s electric cooperatives do not own coal plants but our contracts for wholesale power do have coal generation in the mix. While we don’t own coal, we are not immune from the impact of these regulations.”

Balancing regs and costs

NRECA’s Novak notes that coal-fired units still have many years of effective life and that cooperatives have already invested significantly to meet EPA regulations. Coupled with the other rules now being considered by the EPA, the rule on carbon dioxide emissions could be “the straw that breaks the camel’s back,” Novak says, making the continued operation of some plants financially unfeasible. If complying with the standard proves too costly, it may make more economic sense to shut down some units rather than spend millions to comply.

Cooperatives believe environmental regulation needs to be balanced with a realistic assessment of costs and benefits. The situation is particularly critical with regard to carbon dioxide emissions. “We’re asking the EPA to recognize the unique circumstances of not-for-profit electric cooperatives and to work with us to come up with a fair solution that allows us to continue to provide affordable and reliable power to our members,” says Novak.

Co-op representatives, along with NRECA staff, have met with EPA officials to make their case. Co-ops also continue to work on upgrades and new technologies to make their plants even cleaner while still providing the service the public expects.

“Our folks are engaged in all kinds of activities to improve the efficiency and environmental performance of our power plants across the board,” says Johnson. “They’re very serious about finding solutions that are affordable for members.”

Stricter regs on new plants

The EPA also is proposing emissions standards that require carbon capture and storage at new coal plants. NRECA’s CEO Jo Ann Emerson has pointed out that “This technology does not exist on a commercial scale at any power plant anywhere in the world.”

Acknowledging the burden such requirements will place on the electricity generation industry, the Dept. of Energy’s deputy assistant secretary for clean coal, S. Julio Friedmann, told a House Energy and Commerce subcommittee recently that EPA’s plans to require carbon capture and sequestration technology for new coal plants would likely cause a 70 to 80 percent surge in wholesale coal-based electricity costs. While those figures aren’t new, the public admission by a senior Administration official caught a lot of attention.

“This cost increase is unconscionable but not surprising,” Emerson said. “In light of the administration confirming our deepest concerns about the cost impact of the proposed regulation on new power plants, the rule should be immediately withdrawn and reconsidered. It is unjustifiable for the EPA to push through regulations that rely on technology that would eliminate the domestic and reliable option of coal in the future.” Emerson said.

What you can do

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